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TECH TALK: The Rise of YouTube: Comments (Part 2)

October 17th, 2006 · No Comments

Bambi Francisco wrote:

Although it’s widely being considered a video-sharing site, YouTube is really a social-networking site.

A Google acquisition of YouTube underscores what many observers believe about the future. Yes, it’s about video. But it’s also about a community and about reaching the so-called long tail of production and consumption opportunity on the Web.

No single company has done more than Google this year to demonstrate how strongly it values social networks and the long-tail business potential they could offer.

Buying YouTube marks the largest acquisition yet for Google. It’s also the most defensive, an acknowledgement that video (not basic search) will be the fastest-growing online opportunity for some time in the future and Google today ranks No. 8 in that segment of the market, vs. YouTube at No. 3. Moreover, because YouTube has tons of unauthorized copyrighted material on its site, buying the startup is Google’s riskiest move to date.

Robert Young commented on how the future of social networks is all about communications:

Given the importance of communications as the extensible anchor component for the future of social networks, Ill end this by providing an example of the type of enhancement that I believe would work one that should be obvious. MySpace, for instance, should offer its members the ability to communicate on the wall via video. So imagine friends in your social network leaving messages on your wall, but instead of just text and pictures, they post a video clip (yes, I know you can already post video clips as messages, but its not what I would consider an integrated video communications platform). Doing so will accomplish several strategic objectives.

First, enabling video communication will enhance novelty, thereby driving a new demand curve of stickiness. Secondly, since video messages can be counted as user-generated video content, the traffic and volume of video messages should spike, thus providing MySpace with an added source of video production & consumption that could easily surpass YouTubes traffic count. Lastly, this is the kind of functionality that would be ideal for mobile phone extension. Imagine kids using their video mobile phones to upload and download video messages its something that could easily become the next cool thing and ubiquitous.

Jeff Jarvis wrote in a post entitled Google’s Nichecasting Networks:

What YouTube brings to its deal with Google: people. Though Google depends on the wisdom of the crowd, it still respects us only in aggregate as a mass.
YouTube made the new TV social. It enabled people to recommend the good – or at least amusing stuff not just by their clicks and ratings but also by their actions: YouTube allowed us to put good videos up on our blogs. YouTube enabled us to become network programmers.

So then how does Google make money on those videos? How does it serve advertising? The same way it does now: Google does not make us come to it and its ads; Google takes its ads to where we already are. It serves ads on my own blog.

If the Google purchase of YouTube is successful, it will learn how to listen to people as individuals with taste and timely opinions and use that to enable us to find the video we each want to see wherever it is. It will make YouTube a key channel of distribution even for old, big networks (witness this deal, announced yesterday, between CBS TV and YouTube). And then Google will sell advertising on that new TV screen, powering the explosion of the new television.

Welcome to Google Nichecasting Networks.

Tom Foremski wrote:

One way to look at this deal is to say that YouTube acquired the most efficient and powerful computing platform on the planet. GOOG can offer YouTube instant economies of scale that would have taken it years to build.

In addition, Google has a business model that can monetize YouTube much better, and more quickly than anybody else. If YouTube had an IPO today, it would take it a long time to become a large thriving business, fighting off many similar competitors along the way.

GOOG can monetize YouTube far better and far more quickly than anybody else. Therefore YouTube’s valuation is likely on the low side considering the revenues Google can make from this acquisition.

What the Google/YouTube deal represents is the bet that scale on the Internet will win every time. That if you can aggregate the largest number of users, the largest number of applications, the largest number of advertisers, you will win each time.

Tomorrow: Comments (continued)


TECH TALK The Rise of YouTube+T

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